Bulletin

Intuit's big quarter arrives, but so do challenges

JohnLetzing

SAN FRANCISCO (MarketWatch) -- Intuit Inc., the normally low-profile maker of tax preparation and financial-planning software, unwittingly thrust itself into the spotlight last month when a letter from its legal department to an upstart rival was published online.

In the letter, an incredulous Intuit
INTU, -0.49%
wondered how closely-held Mint.com could be seeing the dramatic increase in popularity that it claimed. "All advertising claims must be verified and substantiated before they are used in advertising," an Intuit attorney reminded Mint.com, while requesting data to back up a boast that it was adding 3,000 users a day.

The public response to the letter was much ado about nothing, said Intuit Chief Executive Brad Smith, and unfairly painted the Mountain View, Calif.-based company as a bully.

But the exchange with Mint.com did underline some of the challenges that Intuit faces as more people seek out convenient, affordable ways to manage their finances, and small businesses that buy the company's QuickBooks software are increasingly exposed to the economic crisis.

Intuit shares have risen roughly 5% in the past three months, while the Nasdaq Composite Index
$COMPQ
has dipped roughly 10%. Intuit shares closed Friday down slightly at $25.34.

Wedbush Morgan analyst Gil Luria wrote in a note to clients that pressure on units unrelated to Intuit's tax preparation business is likely to increase. In particular, Luria wrote that the company's QuickBooks business "is unlikely to wane in the near future."

Smith, however, noted that Intuit has begun offering its own free, Web-based version of Quicken.

Still, tax preparation software remains a primary source of Intuit's earnings, making the current quarter a big one for the company.

Citigroup analyst Brent Thill recently noted that Intuit's tax business so far appears to be "unaffected" by the slowdown.

What's more, Thill wrote in a note to clients that Intuit might even see a boost in its tax business now, thanks to taxpayers looking to software "to ensure they fully benefit from [the] government stimulus plan."

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